SECTION 1 Voting Information About this Document and Related Proxy Materials... 1 Voting Questions and Answers... 1 Controlling Shareholder...

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1 GEORGE WESTON LIMITED MANAGEMENT PROXY CIRCULAR TABLE OF CONTENTS Page SECTION 1 Voting Information About this Document and Related Proxy Materials... 1 Voting Questions and Answers... 1 Controlling Shareholder... 4 SECTION 2 Business of the Meeting Financial Statements and Auditor s Report... 5 Election of Directors... 5 Appointment of Auditor Shareholder Proposal SECTION 3 Board of Directors Attendance and Compensation Directors Compensation Summary of Attendance SECTION 4 Executive Compensation Report on Executive Compensation Performance Graph Summary Compensation Table Indebtedness of Directors, Executive Officers and Employees Pension Plan and Long Service Executive Arrangements SECTION 5 Other Information Director and Officer Liability Insurance Additional Information Normal Course Issuer Bid Contacting the Board of Directors Directors Approval SCHEDULE A Corporate Governance Practices SCHEDULE A-1 Mandate of the Board of Directors i

2 1 SECTION 1 Voting Information About this Document and Related Proxy Materials We are providing this Management Proxy Circular (the Circular ) and proxy materials to you in connection with the Annual Meeting of Shareholders (the Meeting ) of George Weston Limited (the Corporation ) to be held on Thursday, May 11, 2006 at 11:00 a.m. (local time), in Constitution Hall, Room 105 of the Metro Toronto Convention Centre, 255 Front Street West, Toronto, Ontario, M5V 2W6, or any adjournment thereof. This Circular describes the items to be voted on at the Meeting and the voting process, and provides information about executive compensation and our corporate governance practices. Please see the Voting Questions and Answers section below for an explanation of how you can vote on the matters to be considered at the Meeting, whether or not you decide to attend the Meeting. Unless otherwise indicated, all amounts in this Circular are in Canadian dollars and information is as of March 10, Voting Questions and Answers What is the business of the Meeting? At the Meeting, shareholders are voting on two items: the election of directors and the appointment of the auditor. We are not aware of any other matters to be considered at the Meeting. However, you may also vote on any other business that may properly come before the Meeting. In addition, the Corporation s management will report on the performance of the Corporation and respond to questions from shareholders. Who can vote? Holders of common shares of the Corporation ( Common Shares ) as at the close of business on March 30, 2006 are entitled to vote. Each Common Share is entitled to one vote. As of March 10, 2006 the Corporation had 129,038,226 Common Shares issued and outstanding. How do I vote? You are a registered shareholder if your name appears on your share certificates. If you are a registered shareholder, you can vote either: in person at the Meeting; or by submitting your voting instructions by proxy, which means that you give another person authority to vote on your behalf. You are a non-registered shareholder if your name does not appear on your share certificates. For example, you are a non-registered shareholder if your shares are held in the name of a nominee (such as a bank, trust company, securities broker, trustee or custodian). If you are a non-registered shareholder, please see below for information on how to vote your shares.

3 2 SECTION 1 Voting Information (continued) If I am a registered shareholder, how do I vote in person? You do not need to do anything, except attend the Meeting. Do not complete or return the proxy form, as your vote will be taken at the Meeting. You must register with the Corporation s transfer agent, Computershare Investor Services Inc. ( Computershare ), when you arrive at the Meeting. If you wish to vote shares registered in the name of a corporation, the corporation must submit a properly executed proxy to Computershare authorizing you to vote the shares on behalf of the corporation. If I am a registered shareholder, how do I vote by proxy? If it is not convenient for you to attend the Meeting, you may vote by proxy on the matters to be considered at the Meeting in one of two ways: You can authorize the management representatives named in the enclosed proxy form (also available through the Internet at to vote your shares. If returning the proxy by mail, complete the enclosed proxy form by indicating how you want your shares voted. Sign, date and return the proxy form in the envelope provided. Computershare s address for receiving proxies is 100 University Avenue, 9th Floor, Toronto, Ontario, M5J 2Y1. You may appoint another person to attend the Meeting on your behalf and vote your shares. If you choose this option, print the person s name in the blank space provided on the back of the proxy form and indicate how you want your shares voted. If returning the proxy form by mail, please use the envelope provided as described above. You may choose anyone to be your proxyholder; the person does not have to be another shareholder. The person you appoint must attend the Meeting and vote on your behalf in order for your votes to be counted. Proxyholders must register with representatives of Computershare when they arrive at the Meeting. Please remember that your proxy or voting instruction form must be received by 5:00 p.m. (local time) on May 9, 2006 or, if the Meeting is adjourned, before 5:00 p.m. (local time) on the second last business day before any adjournment thereof. If I am a non-registered shareholder, how do I vote my shares? There are two ways that you can vote your shares: In person. If you wish to attend the Meeting and vote in person, you should do one of the following: If you have received a proxy form from your intermediary, insert your own name in the blank space on the form to appoint yourself as proxyholder. If the intermediary has not signed the form, you must sign and date it. Follow your intermediary s instructions for returning the proxy form. Do not otherwise complete the form as your vote will be taken at the Meeting; or If you have received a voting instruction form from your intermediary, follow your intermediary s instructions for completing the form. By proxy. If it is not convenient for you to attend the Meeting, you should do one of the following: If you have received a proxy form from your intermediary, you may vote by authorizing the management representatives named on the form to vote your shares. If you choose this option, you may complete the

4 3 SECTION 1 Voting Information (continued) proxy form by indicating how you want your shares to be voted. If the intermediary has not signed the proxy form, you must sign and date it. Return the completed proxy form as indicated on the form. Alternatively, you may appoint another person to attend the Meeting on your behalf and vote your shares by printing that person s name in the blank space on the form and indicating how you want your shares to be voted. The person you choose does not have to be another shareholder. The person named on the form must attend the Meeting and vote on your behalf in order for your votes to be counted; or If you have received a voting instruction form from your intermediary, follow your intermediary s instructions for completing the form. How will my shares be voted if I appoint a proxyholder? Your proxyholder must vote your shares in accordance with your instructions if you have completed and signed the enclosed proxy form correctly and delivered it to Computershare. If you have not specified how to vote on a particular matter, then your proxyholder can vote your shares as he or she sees fit. If you have appointed the management representatives named on the enclosed form of proxy as your proxyholder, and you have not specified how you want to vote, your shares will be voted as follows: FOR the election of the directors; and FOR the appointment of the auditor. What happens if any amendments are made to these matters or if other matters are properly brought before the Meeting? Your proxyholder will have discretionary authority to vote your shares as he or she sees fit. As of the date of this Circular, management knows of no such amendment, variation or other matter expected to come before the Meeting. If I change my mind, how do I revoke my proxy or voting instructions? If you are a registered shareholder and have returned a proxy form or given voting instructions, you may revoke them in any of the following ways: by completing and signing a proxy form with a later date than the proxy form you previously returned, and delivering it to Computershare; by delivering a written statement signed by you or your attorney authorized in writing: to the offices of Computershare at any time before 5:00 p.m. (local time) on May 9, 2006 or, if the Meeting is adjourned, before 5:00 p.m. (local time) on the second last business day before any adjournment thereof; or in person to the Secretary of the Meeting before the Meeting starts; or in any other manner permitted by law.

5 4 SECTION 1 Voting Information (continued) How many votes are required for approval? A majority of votes cast, in person or by proxy, is required to approve each of the items specified in the Notice of Annual Meeting which accompanies this Circular. Who is soliciting my proxy? Management of the Corporation is soliciting proxies for use at the Meeting and any adjournment thereof. The Corporation is soliciting proxies by mail and its employees may also solicit them personally. The cost of such solicitation will be borne by the Corporation. Is my vote confidential? Yes. Computershare independently counts and tabulates the proxies to preserve the confidentiality of individual shareholder votes. This function is performed independently of the Corporation. Proxies are referred to the Corporation only in cases where a shareholder clearly intends to communicate an individual position to management or when it is necessary to do so to meet the requirements of applicable law. Controlling Shareholder Mr. W. Galen Weston beneficially owns, directly and indirectly through other companies which he controls including Wittington Investments, Limited, a total of 80,684,148 Common Shares representing 62.53% of the outstanding Common Shares. To the knowledge of the Corporation, no other person beneficially owns, directly or indirectly, 10% or more of the outstanding Common Shares.

6 5 SECTION 2 Business of the Meeting Financial Statements and Auditor s Report The consolidated financial statements of the Corporation for the financial year ended December 31, 2005 and the auditor s report thereon are included in the 2005 Annual Report, which is being mailed to shareholders with this Circular. Election of Directors On March 10, 2006, the board of directors of the Corporation (the Board ), in accordance with the Corporation s by-laws, determined that the number of directors to be elected at the Meeting will be 12. It is proposed that the persons named below be nominated for election as directors of the Corporation. Mr. Allan Leighton resigned from the Board on March 10, All are currently directors of the Corporation and all of the nominees have established their eligibility and willingness to serve as directors. Management does not believe that any of the nominees will be unable to serve as a director, but if that should occur for any reason prior to the Meeting, the persons named in the enclosed form of proxy may vote for another nominee at their discretion. Each director will hold office until the next annual meeting or until the director resigns or a successor is elected or appointed. The following pages set out the names of proposed nominees for election as directors, together with their age, place of residence, year first elected or appointed as a director, principal occupation and directorships of other companies. Also indicated for each person proposed as a director is the number of Common Shares beneficially owned by him or her or over which he or she exercises control or direction and the number of other securities of the Corporation and its subsidiary, Loblaw Companies Limited ( Loblaw ), held by him or her or over which he or she exercises direction or control, in each case as of March 10, Mr. Baillie (Corporate Director) is the retired Chairman of the Board and the former Chairman and Chief Executive Officer of Toronto Dominion Bank. Mr. Baillie graduated from the University of Toronto with a B.A. and from Harvard Business School with an M.B.A. 8MAR A. Charles Baillie, 66 Toronto, Ontario Common Shares: 20,000 Deferred Share Units: 2,239 Securities of Loblaw Companies Limited: 5,000 v Mr. Baillie is a director of Canadian National Railway Company and Telus Corporation. He is Chancellor of Queen s University, President of the Art Gallery of Ontario s Board of Trustees and Honorary Chairman of the Canadian Council of Chief Executives. Mr. Baillie is also a director of Dana Corporation which filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code on March 3, Dana s European, South American, Asian-Pacific, Canadian and Mexican Subsidiaries are not included in the Chapter 11 filing. George Weston Board Details: Director since 2003 Independent Director Member: Audit Committee (Chair) and Governance, Human Resource Nominating and Compensation Committee Meets share ownership guidelines

7 6 SECTION 2 Business of the Meeting (continued) 8MAR Robert J. Dart, F.C.A., 67 Toronto, Ontario George Weston Board Details: Common Shares: 25,200 Director since 1994 Deferred Share Units: 657 Non-Independent Director Other securities of George Weston Meets share ownership guidelines Limited: 2000 i /4,000 ii /6,000 iii /2,000 iv Securities of Loblaw Companies Limited: 5,000 v Mr. Dart is a Director, Vice Chairman and former President of Wittington Investments, Limited (holding corporation). He is a former senior tax partner of Price Waterhouse Canada. Mr. Dart graduated from the University of Toronto with a B.Comm. and is a chartered accountant. Mr. Dart is a director of Holt, Renfrew & Co., Limited and Brown Thomas Group Limited. 8MAR Peter B. M. Eby, 67 Toronto, Ontario Mr. Eby (Corporate Director) is a former Vice Chairman and Director of Nesbitt Burns Inc. He was associated with Nesbitt Burns Inc. and its predecessor companies for 38 years in several senior capacities. He is a former Chairman of the Olympic Trust. Mr. Eby graduated from the University of Toronto with a B.Comm. and from the University of California-Berkeley with an M.B.A. Mr. Eby is a director of Leon s Furniture Limited, Provigo Inc. (a subsidiary of the Corporation), Sixty Split Corporation, R. Split II Corporation and TD Waterhouse Inc. U.S. Family of Funds. Common Shares: 2,000 Deferred Share Units: 3,773 George Weston Board Details: Securities of Loblaw Companies Director since 2000 Limited: 5,000 v Independent Director Member: Audit Committee; Executive Committee and Governance, Human Resource, Nominating and Compensation Committee (Chair) Meets share ownership guidelines

8 7 SECTION 2 Business of the Meeting (continued) Mr. Farmer (Corporate Director) is the retired Chairman of the Board, President and Chief Executive Officer of Harris Corporation located in Melbourne, Florida and held several senior positions with that company since He is a past Chairman of the Executive Committee of the Manufacturer s Alliance. 31MAR Phillip W. Farmer, 67 Melbourne, Florida Common Shares: 500 Deferred Share Units: 2,151 Mr. Farmer is a former Governor of the Aerospace Industries Association. He is a former member of the U.S. Secretary of Defense s Defense Policy Advisory Committee on Trade and is Vice Chairman of the Board of Trustees of the Florida Institute of Technology. Mr. Farmer graduated from Duke University with a B.Sc. Mr. Farmer is a director of Vulcan Materials Company and AuthenTec, Inc. George Weston Board Details: Director since 2003 Independent Director Member: Audit Committee and Environmental, Health and Safety Committee Meets share ownership guidelines 8MAR Anne L. Fraser, 65 Victoria, British Columbia Mrs. Fraser (Corporate Director) is an Education Consultant with the University of Victoria, President of EnerG Enterprises Inc. and an Associate, Faculties of Management, Education, Engineering, Law and Fine Arts at the University of Calgary and is a former syndicated broadcaster with CBC. Mrs. Fraser graduated from Acadia University with a B.Sc. and holds Honorary Doctor of Laws degrees from the Universities of Calgary and Dalhousie. In January 2006 Mrs. Fraser was awarded the Order of Canada. Mrs. Fraser is a director of Pier 21 Foundation and The Victoria Foundation. Common Shares: 1,500 George Weston Board Details: Deferred Share Units: 1,110 Director since 1995 Other securities of George Weston Independent Director Limited: 500 i Member: Environmental, Health and Safety Committee (Chair) Securities of Loblaw Companies Meets share ownership guidelines Limited: 1,988 v

9 8 SECTION 2 Business of the Meeting (continued) Mr. Graham is a Director and President of Wittington Investments, Limited and President and Chief Executive Officer of Sumarria Inc. (holding company). He was formerly Vice-Chairman of National Bank Financial and Senior Executive Vice President and Managing Director of Lévesque Beaubien Geoffrion Inc. 8MAR Anthony R. Graham, 49 Toronto, Ontario Common Shares: 10,000 Deferred Share Units: 2,698 Securities of Loblaw Companies Limited: 10,000 v /4,301 vi Mr. Graham is Chairman and a director of both Graymont Limited and President s Choice Bank (a subsidiary of the Corporation). Mr. Graham is also a director of Loblaw Companies Limited, Brown Thomas Group Limited, Holt, Renfrew & Co., Limited, Power Corporation of Canada, Power Financial Corporation, Provigo Inc., and Selfridges & Co. Ltd. George Weston Board Details: Director since 1996 Non-Independent Director Member: Executive Committee; Governance, Human Resource, Nominating and Compensation Committee and Pension and Benefits Committee (Chair) Meets share ownership guidelines 8MAR Mark Hoffman, 67 London, England Mr. Hoffman is Chairman of Cambridge Research Group (technology transfer and investment company) and of Guinness Flight Venture Capital Trust plc in the U.K. Mr. Hoffman graduated from Cambridge University with a B.A. and a M.A. in Economics and from Harvard University with an A.B. in Engineering and Applied Physics and an M.B.A. Mr. Hoffman is a director of Millipore Corporation and Advent International Corporation in the United States, Hermes Focus Asset Management Limited in the U.K. and of Glenhuron Bank Limited and Glenmaple Reinsurance Limited (both subsidiaries of the Corporation). Common Shares: 36,000 Securities of Loblaw Companies George Weston Board Details Limited: 6 v Director since 1975 Independent Director Member: Environmental, Health and Safety Committee and Pension and Benefits Committee Meets share ownership guidelines

10 9 SECTION 2 Business of the Meeting (continued) Mr. Makinson is Chairman and Chief Executive Officer of The Penguin Group, (international media company) and former Group Finance Director of Pearson plc. He is a former Managing Director of the Financial Times newspaper. Mr. Makinson graduated from Cambridge University with a B.A. 8MAR John C. Makinson, CBE, 51 London, England Common Shares: 1,380 Deferred Share Units: 3,366 Mr. Makinson is a director of Pearson plc and Interactive Data Corporation Inc. George Weston Board Details: Director since 1997 Independent Director Member: Audit Committee Meets share ownership guidelines Mr. Prichard is President and Chief Executive Officer and a director of Torstar Corporation (media and newspaper company). He is President Emeritus of the University of Toronto where he served as the University s thirteenth president from 1990 to MAR J. Robert S. Prichard, O.C., O.ONT., 57 Toronto, Ontario Common Shares: 2,000 Deferred Share Units: 2,894 Mr. Prichard graduated from the University of Chicago with a M.B.A., from the University of Toronto with a LL.B. and from Yale Law School with a LL.M. Mr. Prichard is a director of Bank of Montreal, Onex Corporation and Four Seasons Hotels. He is also Chairman of the Ontario Innovation Trust and of the Visiting Committee for Harvard Law School and a director of the Toronto Community Foundation. George Weston Board Details: Director since 2000 Independent Director Member: Governance, Human Resource, Nominating and Compensation Committee Meets share ownership guidelines

11 10 SECTION 2 Business of the Meeting (continued) 8MAR Mrs. Rebanks (Corporate Director) is Treasurer of The W. Garfield Weston Foundation and a Trustee of the Toronto Art Centre and an Honorary Trustee of the American Museum Trustee Association and of the Royal Ontario Museum. Mrs. Rebanks graduated from McGill University with a B.A., from London University with a Certificate in Education and from New York University with a Certificate in Retailing. M. D. Wendy Rebanks, 74 Mrs. Rebanks is a director of The Canadian Merit Scholarship Foundation. Toronto, Ontario George Weston Board Details: Common Shares: 494,647 Director since 1994 Other securities of George Weston Non-Independent Director Limited: 43,300 i /60,000 ii /30,000 iii Member: Environmental, Health and Safety Committee and Pension and Securities of Loblaw Companies Benefits Committee Limited: 20,380 v Meets share ownership guidelines 31MAR Galen G. Weston, 33 Toronto, Ontario Common Shares: 255,000 Securities of Loblaw Companies George Weston Board Details: Limited: 290,000 v Director since 2003 Non-Independent Director Meets share ownership guidelines Mr. Weston is Senior Vice President, Corporate Development of Loblaw Companies Limited. He was previously Vice President, Operations, No Frills and Senior Director of e-commerce Development for Loblaw prior to which he was manager of Retail Execution at President s Choice Financial and an Investment Banking Analyst for Salomon Brothers in the U.K. Mr. Weston graduated from Harvard University with a B.A. and from Columbia University with an M.B.A. Mr. Weston is a director of Wittington Investments, Limited and the Canadian Film Centre. He is a trustee of The W. Garfield Weston Foundation.

12 11 SECTION 2 Business of the Meeting (continued) 8MAR W. Galen Weston, O.C., 65 Toronto, Ontario Mr. Weston is Chairman and President of the Corporation and has been Chairman of Loblaw Companies Limited since Mr. Weston is Chairman of Brown Thomas Group Limited, Holt, Renfrew & Co., Limited, Selfridges & Co. Ltd. and is President of The W. Garfield Weston Foundation. Mr. Weston received a B.A. and was awarded an Honorary Doctor of Laws Degree from the University of Western Ontario. Mr. Weston is a director of Associated British Foods plc, and is a Member of the Advisory Board of Columbia University. Common Shares: 80,684,148 George Weston Board Details: Securities of Loblaw Companies Director since 1967 Limited: 173,316,835 v Non-Independent Director Member: Executive Committee (Chair) Meets share ownership guidelines (i) (ii) Preferred Shares, Series I of the Corporation Preferred Shares, Series II of the Corporation (iii) Preferred Shares, Series III of the Corporation (iv) Preferred Shares, Series IV of the Corporation (v) Common Shares of Loblaw Companies Limited (vi) Deferred Share Units of Loblaw Companies Limited

13 12 SECTION 2 Business of the Meeting (continued) Appointment of Auditor The directors propose that the firm of KPMG LLP be appointed as the auditor of the Corporation for the 2006 fiscal year. As part of the Corporation s corporate governance practices, the Board has adopted a policy prohibiting the auditor from providing non-audit consulting services to the Corporation unless such services are approved in advance by the Audit Committee. The aggregate fees of KPMG LLP for professional services rendered for the audit of the Corporation s financial statements and other services for the fiscal years 2005 and 2004 are as follows $(000 s) $(000 s) Audit fees (1) 3,755 3,416 Audit-related fees (2) 1, Tax consultant fees (3) All other fees (4) Total Fees 5,451 4,508 (1) Audit fees include fees for services related to the audit of the Corporation s consolidated financial statements. (2) Audit-related fees include assurance and related services that are performed by the Corporation s auditor. These services include accounting consultations in connection with the review of quarterly reports to shareholders, audit of pension plans, comfort letters and the interpretation of accounting and financial reporting standards. (3) Tax consultant fees include fees for assistance with tax planning, including commodity tax issues. (4) Other fees related to risk management, labour relations, internal control compliance and/or regulatory compliance. Shareholder Proposal The Canada Business Corporations Act permits certain eligible shareholders of the Corporation to submit shareholder proposals to the Corporation, which proposals may be included in a management proxy circular relating to an annual meeting of shareholders. The final date by which the Corporation must receive shareholder proposals for the annual meeting of shareholders to be held in 2007 is December 10, 2006.

14 13 SECTION 3 Board of Directors Attendance and Compensation Directors Compensation Directors who are also members of management of the Corporation receive no additional remuneration as directors. Annual retainers (paid quarterly) and attendance fees were paid to non-management directors on the following basis during fiscal 2005: TYPE OF FEE AMOUNT Annual Retainer board member 50,000 non-audit committee chair 3,000 non-audit committee member (1) 4,000 audit committee chair 10,000 audit committee member (1) 5,000 Attendance Fees board or committee meeting 2,000 meeting of half day or more attended at the request of the Board or a Committee 2,000 (1) including committee chairs $ The Governance, Human Resource, Nominating and Compensation Committee (the Governance Committee ) assesses the adequacy and form of compensation paid to directors in order to ensure that their compensation reflects their responsibilities as directors. Periodically, the Governance Committee benchmarks directors compensation against compensation paid by major Canadian public companies similar in size to the Corporation. In September 2005, the Governance Committee retained the services of an outside consultant, 3XCD Inc. to advise on board compensation for members of the Board in terms of both type of compensation and value. The consultant s report compared the Corporation s directors compensation arrangements to those of that peer group using both criteria. The Governance Committee concluded that no adjustments were appropriate at this time. Deferred Share Unit Plan To ensure that directors compensation is aligned with shareholder interests, directors may receive up to 100% of their fees in Deferred Share Units ( DSUs ). A DSU is an amount owed by the Corporation to directors having the same value as one Common Share of the Corporation determined at the time the fees are earned but is not paid until such time as the director leaves the Board, thereby providing an ongoing equity stake in the Corporation throughout the term as a Board member. Payment of DSUs is made in Common Shares of the Corporation purchased on the TSX. In fiscal 2005, 9 directors elected to take all or a portion of their annual retainer and attendance fees in DSUs. As at December 31, 2005 the amount owing in respect of DSUs currently outstanding to Board members was $1,865,048.

15 14 SECTION 3 Board of Directors Attendance and Compensation (continued) Compensation and Attendance Information Under share ownership guidelines adopted by the Board, directors are required to hold Common Shares or DSUs and/or securities of Loblaw with a value of not less than $250,000. Until this position is achieved, directors must take a portion of their compensation from the Corporation in the form of DSUs. All current directors either meet or are in the process of complying with these share ownership guidelines. Summary of Attendance The following table provides a summary of each director s attendance at Board and Committee meetings during fiscal Governance, Human Resource, Environmental, Nominating and Health and Safety Compensation Pension and Board Audit Committee Committee Committee Benefits Committee Directors (7 meetings) (6 meetings) (5 meetings) (6 meetings) (4 meetings) A. Charles Baillie* 6/7 6/6 4/4 Robert J. Dart 7/7 Peter B.M. Eby 7/7 6/6 6/6 Phillip W. Farmer 7/7 5/6 5/5 Anne L. Fraser 7/7 5/5 Anthony R. Graham 7/7 6/6 4/4 Mark Hoffman 6/7 5/5 4/4 Allan L. Leighton** 7/7 3/4 John C. Makinson 7/7 6/6 J. Robert S. Prichard 6/7 6/6 M.D. Wendy Rebanks 5/7 5/5 4/4 W. Galen Weston 7/7 Galen G. Weston 7/7 * Mr. A.C. Baillie joined the Governance, Human Resource, Nominating and Compensation Committee on May 11, ** Mr. A. Leighton retired from the Board effective March 10, 2006.

16 15 SECTION 3 Board of Directors Attendance and Compensation (continued) The following table summarizes compensation paid to non-management directors of the Corporation during fiscal 2005 (a) : Committee Committee Committee Board and Other Board Chair Member Attendance Attendance % Allocated Name Retainer Retainer Retainer(s) Fees Fees Total Fees to DSUs ($) ($) ($) ($) ($) ($) (%) A. Charles Baillie (b) 50,000 7,500 8,000 12,000 26, , Robert J. Dart 50,000 12,000 2,000 64, Peter B. M. Eby (c) 50,000 3,000 12,000 14,000 34, , Phillip W. Farmer 50,000 9,000 14,000 26,000 99, Anne L. Fraser 50,000 3,000 4,000 14,000 18,000 89, Anthony R. Graham (d) 50,000 3,000 11,000 14,000 22, , Mark Hoffman (e) 50,000 8,000 12,000 22,000 92,000 0 Allan L. Leighton (f) 50,000 4,000 14,000 10,000 78, John C. Makinson 50,000 5,000 14,000 20,000 89, J. Robert S. Prichard 50,000 4,000 12,000 14,000 80, M. D. Wendy Rebanks 50,000 8,000 10,000 24,000 92,000 0 Total 550,000 16,500 73, , , ,500 Notes: (a) Directors are reimbursed for transportation and other expenses incurred in connection with attendance at Board and Committee meetings. (b) Mr. Baillie assumed the position of Chair of the Audit Committee on May 11, (c) Mr. Eby received additional director fees from Provigo Inc. in the amount of $24,955. (d) Mr. Graham received additional director fees from President s Choice Bank in the amount of $11,250. (e) Mr. Hoffman received additional director fees from Glenhuron Bank Limited and Glenhuron Re-insurance Limited, both subsidiaries of the Corporation, in the amount of US$14,000. (f) Mr. Leighton received consulting fees from the Corporation in the amount of $500,000.

17 16 SECTION 4 Executive Compensation Report on Executive Compensation The responsibilities of the Governance Committee are summarized on page 36. Among other matters, the Governance Committee is responsible for reviewing and approving overall compensation policies and reviewing, approving and recommending compensation for senior employees of the Corporation and its operating subsidiaries and forms of compensation, including for those Named Executive Officers listed in the Summary Compensation Table on page 24. As of March 10, 2006, the members of the Governance Committee were A. Charles Baillie, Peter B.M. Eby (Chairman), Anthony R. Graham and J. Robert S. Prichard. All members of the Governance Committee are independent directors except for Mr. Graham who is an executive officer of Wittington Investments, Limited, the Corporation s controlling shareholder. Compensation Philosophy The Corporation s compensation arrangements for its senior employees are intended to attract, retain and motivate high calibre employees who can effectively contribute to the long-term success and objectives of the Corporation. Senior employees receive compensation based on their level of individual responsibility and experience, the market value of the job they perform and the success of the Corporation in meeting its objectives and creating shareholder value. The Corporation seeks to position total compensation for its senior employees, including base salary, annual cash incentives and long-term incentives, within the first quartile (75 th percentile) of that paid by companies in the comparator group described below for positions with equivalent responsibilities and scope. Independent Advice and Comparator Group During 2004 the Governance Committee retained an external compensation consultant, 3XCD Inc., to analyze total compensation paid by the Corporation and the form of such compensation to ensure it is competitive with that paid by companies in the comparator group described below and is effective in achieving the objectives established by the Corporation. In 2005, 3XCD Inc. was also engaged to update its previous analysis on certain aspects of senior executive compensation of the Corporation s operating subsidiaries. In determining compensation for senior employees, including the Named Executive Officers, the Governance Committee considers the compensation practices of a comparator group of Canadian and U.S. companies in the food processing and retail industries. In determining compensation for the Named Executive Officers, the Governance Committee also considers publicly-disclosed executive compensation information of various Canadian public companies whose revenues, profitability and market capitalization are comparable to those of the Corporation. This information is compiled and analyzed by an external compensation consultant retained by the Governance Committee who then provides the information to the Governance Committee along with recommendations. Components of Total Compensation The aggregate compensation of senior employees of the Corporation, including the Named Executive Officers, consists of four components: base salary, annual bonus incentives, long-term equity-based incentives and pension

18 17 SECTION 4 Executive Compensation (continued) arrangements. The Corporation aims to ensure that each senior employee s compensation is balanced among these components with a greater emphasis on the variable components of compensation. Base Salary The Governance Committee reviews base salaries for senior employees every 2 or 3 years. Salaries are set with reference to the criteria and competitive benchmarks reviewed by external consultants and approved by the Governance Committee. The Corporation s compensation philosophy with respect to base salaries is to maintain levels at approximately the market median (50 th percentile) and to place more upside opportunities on the discretionary performance-based incentives of annual bonus and long-term equity-based incentives. Annual Bonus Incentives Weston Foods In 2005, an economic value added ( EVA ) bonus program was introduced for Weston Foods similar to that of Loblaw as described below. Senior employees of Weston Foods, Canada and the U.S. participated in this EVA bonus plan. EVA targets were based on budgeted levels of operating income and capital expenditures as stated in the 3-year ( ) strategic plan approved by the Board. Bonuses paid to Canadian employees will be based on targets approved for the Canadian business and those paid to U.S. employees will be based on targets approved for the U.S. business. As a result of the bonus plan, a significant portion (approximately 50%) of each senior operating employee s annual total cash compensation over the 3 year plan period is linked to the EVA generated by each of the Weston Foods businesses. The EVA bonus plan more closely aligns the bonus component of senior employees compensation with the long-term shareholder objective of producing sustainable long-term returns above the cost of capital. Loblaw Senior employees of Loblaw currently participate in an annual cash bonus plan based on EVA principles which measure the economic value generated by the assets employed by Loblaw. Using this measure for purposes of calculating payments under Loblaw s bonus plan allows the Loblaw Governance Committee (as defined below) to: measure and link bonuses earned to capital investment decisions and operating results which, over time, create shareholder value; measure the effectiveness of allocation of capital; and focus on longer term value creation. The Loblaw EVA plan reflects the operating performance of Loblaw while taking into account the cost of capital employed to generate operating income. Cost of capital is the economic cost of all capital employed in Loblaw s business and includes cost of debt (including off-balance sheet items such as operating leases) and cost of equity. Revenue enhancements which generate incremental operating income and cost reduction programs requiring no additional capital investment increase return on capital employed as well as EVA. Positive EVA is created when after-tax operating income exceeds the cost of capital.

19 18 SECTION 4 Executive Compensation (continued) As a result of the bonus plan, a significant portion (historically between 40% and 50%) of each senior Loblaw employee s annual total short-term compensation is linked to the EVA generated by Loblaw. The application of EVA in determining the annual bonus more closely aligns the bonus component of the senior employee s compensation with the long-term shareholder objective of producing sustainable long-term returns above the cost of capital. The EVA bonus program encourages the development of management strategies that increase shareholder value by aligning operating income generation with the efficient management of assets. The EVA bonus earned in any year is paid out in cash over a 3-year period, with one-third being paid in each year commencing with the year immediately after the bonus is earned. As a result of this payout mechanism, an employee s aggregate annual bonus will reflect Loblaw s results over a three-year period, which encourages focus on long-term performance as opposed to decisions to enhance profitability for the short term. Equity-Based Incentives In 2005, the Governance Committee approved a change in the mix of executive compensation for the Corporation s senior employees. The change reduces the use of stock options by approximately one-third and introduces a new long-term equity based incentive in the form of restricted share units ( RSUs ) more fully described below. Stock Option and Share Appreciation Right Plans Senior employees participate in the Corporation s stock option plan ( Option Plan ). In addition, the Corporation pursuant to its share appreciation right plan ( Share Right Plan ) issues share appreciation rights to senior employees of the Weston Foods U.S. business. Allocations under the Option Plan and the Share Right Plan are both intended to provide strong incentives for superior long-term future performance consistent with shareholders objectives. The Option Plan and the Share Right Plan link compensation to shareholders interests because the value of the award is directly related to the Corporation s future stock price. Vesting of options and share appreciation rights granted after January 1, 2005 to Weston Foods Canadian and U.S. employees will be dependent on the Weston Foods businesses, each achieving targeted levels of operating income performance during the vesting period of the options. The Option Plan and Share Right Plan have two objectives: to give each holder an interest in preserving and maximizing shareholder value over the long term; and to enable the Corporation to attract and retain individuals with experience and ability and to reward individuals for long-term performance and expected future performance. To hold stock options and share appreciation rights, an individual must be an officer or employee of the Corporation or an affiliate of the Corporation. Options granted pursuant to the Option Plan and share appreciation rights granted pursuant to the Share Right Plan vest over a period of five years at 20% per year, subject to early termination clauses in certain circumstances, including death, retirement and termination of employment. In any of these circumstances, any unvested options or rights expire and vested options or rights continue to be exercisable for prescribed periods following cessation of employment. The Corporation seeks to maintain the total number of Common Shares reserved for issuance under the Option Plan at 5% or less of the total number of issued and outstanding Common Shares. Under the Option Plan,

20 19 SECTION 4 Executive Compensation (continued) individuals can elect to receive Common Shares or the share appreciation value in cash in accordance with the terms of the Option Plan. In most cases on exercise of stock options, stock option holders elect to receive cash representing the share appreciation value, not shares. This avoids the dilutive effect of increasing the number of Common Shares issued pursuant to the Option Plan. These grants of equity-based incentives are awarded as part of total compensation without reference to outstanding grants held by a particular employee. The total unvested stock option entitlements are reviewed at the time of stock option grants to ensure that the Corporation is within its target of no more than 5% of outstanding Common Shares being subject to options at any time. The Governance Committee examines options granted by companies in the comparator group described above to ensure that these grants to the Corporation s senior employees are competitive. Stock options and share appreciation rights are granted to senior employees based upon a multiple of base salary reflecting their position, length of service and responsibility. For the fiscal year commencing January 1, 2005 at the subsidiary operating level, the multiple ranges from one times salary to ten times salary at the most senior levels except for the Named Executive Officers. These equity-based incentives are not granted every year and are reviewed by the Governance Committee as part of its regular review of compensation. The maximum number of Common Shares which has previously been approved by shareholders under the Option Plan is 7,061,985. This number cannot be increased without shareholder approval. As at March 10, 2006, the Corporation had total unexercised stock options outstanding of 1,625,074 Common Shares or 1.3% of the issued and outstanding Common Shares. The Corporation currently has 656,072 Common Shares available for future grants of stock options. During the second quarter of 2005, the Corporation granted 174,108 share appreciation rights to 86 employees at an exercise price of $ per Common Share under its existing Share Right Plan, which will be settled in cash, 371,538 stock options to 105 employees at an exercise price of $ per Common Share under its existing Option Plan which allows for settlement in cash at the option of the employee and 213,994 stock options to 19 employees at an exercise price of $ per Common Share, which will be settled by issuing Common Shares. During the fourth quarter of 2005, the Corporation granted 100,130 options at an exercise price of $95.88 per Common Share to 2 employees, which will be either settled by issuing Common Shares or in cash. During ,247,627 Loblaw Options were granted to 236 Loblaw employees. Subsequent to year end Loblaw granted 48,742 options to 1 employee. Restricted Share Unit Plan In 2005, the Governance Committee approved a Restricted Share Unit Plan ( RSU Plan ) for certain senior employees of the Corporation to ensure compensation to senior employees remains competitive, to foster retention and to ensure that the long-term compensation program is aligned with the maximization of shareholder value. The RSUs entitle the employee to a cash payment after the end of each performance period of up to 3 years following the date of their award. The RSU payment will be an amount equal to the weighted average price of a Common Share for a prescribed period immediately preceding the end of the performance period for the RSUs multiplied by the number of RSUs held by the employee. During the first year following the grant, the RSU Plan

21 20 SECTION 4 Executive Compensation (continued) provides that should a participant voluntarily resign or be terminated for cause, his or her RSUs will be cancelled and no payment will be made. Following the first year from the date of the grant, a participant whose employment is terminated other than for cause will be entitled to receive a payment based on a prorated portion of his or her RSUs, with reference to the time remaining in the performance period. The payment is then calculated with reference to the date his or her employment ceases. During the second quarter of 2005, the Corporation granted 142,685 RSUs to 183 employees and during the fourth quarter, 18,273 RSUs were granted to 2 employees. During the first quarter of 2006, 143,049 RSUs were granted to 99 employees which will entitle the employees, after a 3 year performance period, to a cash payment equal to the number of RSUs multiplied by the weighted average price of a Common Share for a prescribed period immediately preceding the end of the performance period. The performance period end date is three years from the date of each grant. During ,335 Loblaw RSUs were granted to 236 Loblaw employees. Subsequent to year end, 644,712 Loblaw RSUs were granted to 231 Loblaw employees. Share Ownership Guidelines Share ownership guidelines were introduced in January 2003 and are designed to further align the interests of senior executives with those of the Corporation s shareholders. Under these guidelines, executives are expected to own Common Shares with a value equal to a multiple of their base salary as determined by their position. The guidelines range from five times base salary for the President, three times base salary for Named Executive Officers and two times base salary for certain other executive officers. Executives are expected to attain their ownership requirements within five years of becoming an executive officer within these categories. Share ownership under these guidelines is defined as direct ownership of Common Shares or other securities of the Corporation and common shares of Loblaw. The beneficial share ownership of each Named Executive Officer other than for the Chairman and President and the dollar value of such share ownerships based on the closing price on the TSX on March 10, 2006 is: Number of Shares Share Value Name Weston Loblaw Weston Loblaw John A. Lederer 75,000 4,320,000 Gary J. Prince 29,000 2,565,630 Richard P. Mavrinac 4,192 8, , ,492 Ralph A. Robinson 13, ,186,498 5,760 Retirement Plans Senior employees participate in the Corporation s Designated Executive Pension Plan. In addition, senior employees of the Corporation, including the Named Executive Officers, are entitled to a Supplementary Employee Retirement Plan. Information on these plans can be found under Pension Plan and Long Service Executive Arrangements on page 28.

22 21 SECTION 4 Executive Compensation (continued) Employment and Retirement Arrangements Messrs. Prince and Robinson each entered into employment agreements with the Corporation effective January 1, 2003 which, among other things, determined at that time their base salaries to be US$1 million and $450,000, respectively, and entitled each of them to an annual bonus of up to a maximum of 100% of base salary based upon achieving budget or other performance targets consistent with other senior employees bonus plans. Mr. Robinson s annual base salary was reviewed by the Governance Committee and increased to $550,000 for 2004 and increased again for 2005 to $650,000. Upon ceasing to be employed by the Corporation, Messrs. Prince and Robinson may be entitled to a maximum aggregate termination payment of up to U.S. $5 million and $4 million respectively, subject to certain non-competition covenants. Mr. Mavrinac also entered into a 5 year agreement with the Corporation and Loblaw effective January 1, 2003 which fixed his base salary at that time at $500,000 for 2 years to be allocated between the Corporation and Loblaw, and entitles him to a targeted annual bonus of 75% based on EVA not to exceed 100% of base salary. Mr. Mavrinac s base salary was reviewed by the Governance Committee and his employment agreement was amended to increase his base salary to $600,000 effective January 1, Upon ceasing to be employed by the Corporation, Mr. Mavrinac may be entitled to a maximum aggregate termination payment of up to $5 million, subject to certain non-competition covenants. Mr. Lederer was appointed President of Loblaw on January 1, 2001 and entered into an employment agreement with Loblaw. In January 2004, in accordance with his agreement, Mr. Lederer s base salary was reviewed by the Loblaw Governance, Employee Development, Nominating and Compensation Committee (the Loblaw Governance Committee ), and his salary was set at $1.35 million annually for the 3 year period ending December 31, 2006 and his bonus was based on a target of 75% of salary based on EVA, not to exceed 100% of base salary, with an additional bonus to a maximum of $250,000 per annum at the discretion of the Loblaw Governance Committee based upon, among other things, personal performance in achieving Loblaw s approved strategies. As part of the annual review of Mr. Lederer s compensation, the Loblaw Governance Committee considered his compensation arrangements, the compensation of senior executives in other North American retail companies, as well as the Corporation s long term strategic objectives which are dependent on the successful completion of the current significant transformative changes. Based on this review, the Loblaw Governance Committee decided that a further grant of RSUs to Mr. Lederer was appropriate. Accordingly, Mr. Lederer s agreement was amended on January 1, 2006 to provide for an additional grant of Loblaw RSUs equal to $15 million divided by the fair market value of a Loblaw common share at the date of grant. On February 16, 2006, 271,985 Loblaw RSUs were granted to Mr. Lederer. These RSUs will be payable in cash in three instalments on performance periods ending on December 31, 2006, 2007 and Upon ceasing to be employed by Loblaw, Mr. Lederer may be entitled to a payment of a maximum of $12.5 million, subject to certain non-competition covenants. Chairman and President s Compensation The Chairman and President s compensation is reviewed annually by the Governance Committee with the assistance of comparator information provided by external compensation consultants. The Chairman and President does not participate in the Governance Committee s or the Board s decisions relating to his compensation.